Sunday, 16 March 2008

Within the internal market customs duties on imports and exports are banned. But in addition to these obvious prohibitions other charges or ‘taxes’ can have discriminatory effects. The Court of Justice has repeatedly drawn the line between genuine measures and discriminatory practices.

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Article 25 of the Treaty establishing the European Community (TEC) is one of the provisions left alone by the intergovernmental conference (IGC 2007) in the Treaty of Lisbon (ToL). In the renamed Treaty on the Functioning of the European Union (TFEU) the Article number is initially preserved, but in later versions of the treaty the provision will appear as Article 30 (OJ 17.12.2006 C 306/207):

Part Three Union policies and internal actions

Title II Free movement of goods

Chapter 1 The customs union

Article 25 TFEU (ToL), renumbered Article 30 TFEU

Customs duties on imports and exports and charges having equivalent effect shall be prohibited between Member States. This prohibition shall also apply to customs duties of a fiscal nature.

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The unchanged provision can be followed through the preceding stages:

Article 25 TEC in OJ 29.12.2006 C 321 E/52.

Article III-38 Draft Constitution in OJ 18.7.2003 C 169/34.

Article III-151(4) Constitution in OJ 16.12.2004 C 310/65.

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As a customs union the European Community (in the future the European Union) has a common customs border in relation to third countries.

Within the customs union customs duties are prohibited on both imports and exports.

This prohibition is extended to all discriminatory measures, whatever they are called. For instance inspection charges on imported goods or ‘taxes’ targeting imports unfairly compared to domestic products are prohibited. A measure is judged not by its name, but by its effects.

Since taxation is largely a matter for the member states, and the efforts to harmonise taxation have yielded fairly modest results, the Court of Justice (to be known as the Court of Justice of the European Union, CJEU) has frequently had to pronounce legislative acts of member states to be contrary to the prohibition.

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Discriminating charges having equivalent effect, including customs duties of a fiscal nature, between member states are less a question of misapplication of EC legislation and more of mis-legislation. Therefore the Court of Justice has often been called on to draw the lines between prohibited and justified national measures.

The handy Alphabetical Table of Subject-matter (Table alphabétique des matières) covers the volumes from 1985 to 2001. Unfortunately it is available only in French, but under ‘Droits de douane et taxes d’effet équivalent’ you find more than four tightly spaced pages of cited cases: